Governor projects $3 billion state budget deficit

Madison (WKOW) -- Gov. Jim Doyle says nothing will be off the table as the state deals with the effects of a weakening economy.

During a state capitol news conference, Doyle said education will remain his priority, but may have to sustain budget cuts.

"I haven't said education's off limits. I've said we're going to have to maintain good, high quality education. I think at this point, given that we don't even know what the depths of this (slump) are nationwide, you can't say anything's off limits."

Doyle said that job cuts and spending reductions across all of government could be part of the mix. But Doyle said vital positions such as prison guards and certain staff positions at state run mental health institutions will be protected.

Doyle said he won't institute a hiring freeze, but any opening will be closely examined before being filled.

Doyle said tax collections were down in August and he expects that trend to continue through the rest of the year.

For the year-to-date, Doyle said tax revenues have increased just 0.4%. In ordinary times, state government budgets are built on expected tax revenue increases of around 3%.

Doyle said the next two-year budget could face a $3 billion deficit, or more.

Republican joint finance committee co-chairperson Rep. Kitty Rhoades (R-Hudson) said state agencies have to cut back further, just as families are doing in this current economic climate.

Earlier this year, Doyle and state lawmakers repaired a deficit in the current state budget by enacting new spending cuts and identfiying new state revenues. Part of that plan involved issuing bonds to immediately capture money owed the state from big tobacco companies. Doyle said he still expects those bonds to realize previous dollar projections, even though officials in California and Massachusetts have not been able to sell bonds in the current chaotic market. Doyle said Wisconsin has time to wait for the market to stabilize.

Wisconsin Taxpayer Alliance executive director Todd Berry said Wisconsin should have been better prepared for the economic downturn. "Wisconsin's budgets for many years have not had cushions, (sufficient) rainy day funds. Those are the only ways that a state can protect itself against international and economic surprise."

Doyle said Wisconsin was on track to have $200 million in reserve until the disruptions in the stock market and credit markets hit in August.

Doyle also said he intended to finish out his current four year term, which ends in January 2011, unless he encountered an unforseen health issue. Doyle has been rumored to be up for a position in a potential Barack Obama presidency.